Highlights in this Issue

No Frills carriers: Revolution or Evolution? p. 4

A Five Forces Analysis of the Central European Market p. 6
World Travel Market Conference 2006 p. 8
LCCs in Russia p. 11
LCCs in Poland p. 13
The Low Cost Carriers Analysis Newsletter
AIR SCOOP ANNOUNCEMENTS
EDITORIAL Air Blow - News In Brief

L
ast May, Air Scoop made a special issue on Central and Eas- Air France-KLM announced the launch of a
tern European LCC markets. These markets are more than new LCC.
ever under heavy competitive pressure (p. 13), especially since Based in Paris Orly Airport, it would be mo-
powerful “Islanders” decided to invade them (p. 14). Maciej Kwia- deled on its subsidiary: transavia.com, and
tkowski, CEO of Centralwings, Polish LCC, has kindly answered jointly owned by Air France (60%) and tran-
to our questions about his company, his market and his competitors savia.com (40%). The French-Dutch legacy
(p. 2). These C&E markets are also important as they are conside- carrier wants to benefit from the important
red as a step towards far eastern areas, such as Russia (p. 11-12), for leisure market with this medium-haul carrier
many European LCCs. Indeed, German LCCs prefers to attack these with “southern” destinations (Morocco, Spain,
new markets with currently low LCC penetration rather than wes- Tunisia…).
tern European markets (p. 11). Russian airports are also aware of the
opportunities and threats created by the development of low-cost Ryanair announced a third base in Spain by
carriers in these markets (p. 12). The use of SWOT Analysis or Mi- the end of 2007.
chael Porter’s Five Forces framework (p. 6-7) applied to these mar- Ryanair has already two hubs in Spain in Gi-
kets is really relevant to understand factors of influence and to anti- rona and Madrid, and is still negotiating with
cipate as best as possible future mutations. For instance, Ryanair is five Spanish airports to decide where to settle
generally given top billing for generating non-ticket revenue from its its last base.
passengers. But another star may steal a portion of the spotlight from
Europe’s top low cost carrier (p. 5). A recent study from the Civil Air Scoop - In the Air
Aviation Authority (CAA) pointed out benefits of European LCCs,
but also revealed that socio-economic profiles of air passengers have
not changed (p. 4). The release of this study matched with the World Vueling: a base in Paris
Travel Market 2006 in London (p. 8). This was an opportunity to
meet some delegates and speakers, like Vojin Vlahovic (Director
of Montenegro National Tourism Organisation) and Niko Bulic
(Director of Croatian National Tourist Board) and to know their
points of view on Low-cost carriers in Europe (p. 9). This event was
also a chance to discover smaller carriers, such as Fly Gibraltar (p.
10).

As the year 2006 finishes, the whole Air Scoop Team wishes you a
merry Christmas and a great new year 2007! We would like to thank
all our readers who have made this first year of Air Scoop newsletter
such a phenomenal success. See you in 2007 for more LCCs analysis,
exclusive interviews of LCCs leaders, full LCCs events coverage, and
many new projects yet to come. Ryanair and
UAV 737RS

Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
Exclusive Interview of Maciej Kwiatkowski,
(CEO of Centralwings) Maciej Kwiatkowski,
CEO of Centralwings

Could you please present Centra- many attractive destinations all over
lwings to our readers? What are your Europe. We know the market and
specificities compared to other Euro- we know it well. We want to be as
pean LCCs? What do you do better attentive as possible to our passengers
than your competitors? needs - offering good quality and best
standards.
Centralwings has been operating fli-
ghts into the UK since February 2005 Ryanair, easyJet and Wizz Air have
and into Ireland since October 2005. number of Polish nationals choosing
announced the launch of new routes to travel for business and occupatio-
We operate routes into London Ga- to Polish market. How do you plan
twick from Warsaw and Krakow; nal opportunities; for tourism; and
to manage such competition in this to visit family and friends. We also
Edinburgh from Warsaw, Gdansk and market? What are your advantages
Katowice; Shannon from Warsaw; provide visitors to Poland with access
on this market? to some of the most beautiful and ex-
and Dublin from Wrocław, Gdansk
and Katowice. We have carried over citing destinations, such as Krakow,
In addition to the routes mentioned Wroclaw, and Gdansk.
1.9 million passengers since the begin- above, Centralwings has added 11
ning of our operations. Centralwings new routes to its schedule for win-
operates nine Boeing 737 400s and “Islanders” (Ryanair and easyJet)
ter 2006/7. Centralwings operates need to find new attractive destina-
300s. The fleet is serviced and main- the largest number of the flights on
tained at a certified technical base of tions to maintain their growth; The-
the Polish market during this season. refore Central Europe represents an
PLL LOT. This includes 6 new flights to the UK
We offer our passengers all kinds of important market for these LCCs.
and Ireland (from Warsaw to London Who are your most dangerous com-
services to make their travel easier, Stansted, Gdansk to Shannon, Wro-
faster and more low cost. Centra- petitors: ‘Centralers’ (SkyEurope,
claw to London Stansted and Cork, Wizz Air, Estonian Airlines…) or
lwings gives wide variety of payment Krakow to Cork and Szczecin to Du-
methods, by money transfer, cash or ‘Islanders’: Now? In near future?
blin). This winter we offer a total of
credit card. Our passengers are able to 24 connections.
choose their seat at the check in and Poland is the second fastest growing
We operate to the UK, Ireland, Ita- air travel market in the world after
pay less for any excess luggage then in ly, France (routes to Lille and Paris
any other low cost airline. China. Central Europe is very compe-
launched this winter) and other mar- titive, with the presence of all the ma-
Children aged between 2-16 years old kets. We also offer charter flights and
are eligible for a 20 per cent discount jor European players. Even this year,
charter-mix products (in the win- there have been new entrants. Cen-
when traveling with Centralwings, ter season this year this will feature
and there is no charge for infants un- tralwings has just celebrated a second
Grenoble - very popular with Polish year of operations during which time
der 2-years old. Passengers needing to skiers last year and a successfully
check in excess baggage can pre-book it has become third largest player in
performing route for Centralwings). the Polish LCC market and achieved a
at a discounted rate via the Centra- During the summer seasons we also
lwings website. We also offer two op- 17 per cent share of the market. Next
operate Mediterranean charters to year, we will build on this strong foo-
tions for travel insurance, group rates, holiday destinations in the Greek Is-
special offers, car rentals, hotels and ting. Healthy competition is very good
lands and Sicily. These are extremely for passengers in terms of pricing and
much more. Our Call Centre is availa- popular with Poles. At present we are
ble in five language versions and our the wide variety of schedules and ser-
a major charter operator within the vices available. We are able to offer
Website – www.centralwings.com - is Polish market, with a 33% share of the
one of the three most popular websi- attractive discounts and promotions
sector. We are able to combine ticket to our customers, offering tickets so-
tes in Poland with more than six mil- sales for tour operators with direct
lion page views per month. metimes for as little as 1 euro, pound
online sales through charter-mix. or zloty.
We are the only Polish low cost airline Currently the most important stra-
operating from seven regional airports tegic markets for Centralwings are
in Poland, carrying people to and from the UK and Ireland, due to the large

2 Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
The European Low cost carriers the different kinds of activities that Are you worried about the shortage
market has reached a certain ma- the airline undertakes. Our onboard of pilots and crew hitting LCC mar-
turity which leads to its consolida- sales are working well and continuing ket?
tion. During this transition, what to develop. We offer a special menu
are, for you, the greatest threats during flights as well as duty free There are concerns which all airli-
to the European Low cost carriers? service available during flights out- nes will need to address, due to the
Fuel rising? Overcapacity? Evolu- side the EU (charter flights). There dynamics of the growth in the LCC
tion of airports? Regulation? is a special offer for children who fly sector. As the market grows, more
with Centralwings - the Captain pilots are needed. Centralwings has
As a Polish low cost airline operating Bear menu. Toys and gadgets are a highly qualified group of pilots and
from a large number of Polish regional available to keep youngsters amused is in a strong position to deal with
airports, we see operational efficiency during the flight. Passengers also have this challenge.
as paramount. Some airports struggle a unique opportunity to send a post-
to keep pace with the growth of the card from onboard the plane, with What are the options for Centra-
market and the increased traffic, and greeting courtesy of Centralwings. lwings to transform its business
monopolies exist between handling Advertisers from all over Europe can model in order to make more costs
companies, fuel providers, agents and use our media products to raise their savings?
airports. Fuel prices and security at profile. Adverts can be placed on
airports also have an impact on airli- tip-up tables, seats, headrests and a Since taking up my role as CEO in
nes, particularly the low cost sector, range of other surfaces. During the June, my goals have been to build the
which operates with lower margins. first quarter of 2007, Centralwings strategy for the airline and focus on
The key for us is to ensure that we will launch the first issue of its in-fli- cost efficiencies. Our primary aim is
are able to react quickly to the sligh- ght magazine. to reach profitability and also to be a
test changes within the market – resi- low cost, and sustain our market po-
gning routes that are not performing Do you believe that consolidation sition through dynamic growth. Ear-
well enough and moving operations of the market will lead to 2-3 main ly on, I identified short, medium and
to more profitable locations, whilst LCCs in Europe, or do you think long term goals for Centralwings.
retaining our standards of quality and there will always be many LCCs on One of the most important long-term
service. niche markets? goals is to find an alternative base as
Warsaw does not currently meet our
Many LCCs look after extra-reve- Consolidation is a very probable sce- needs as a low cost airline. Medium
nues to offset the low price of their nario in the medium term for the term goals focused on cost savings in
tickets. What are the projects of LCC sector. This may mean that in- different areas of our activities and in
Centralwings in terms of Extra-re- vestors choose to collaborate with some cases to renegotiate contracts.
venues? other investors to streamline their The first task was to review the per-
efforts and manage financial risk. formance of routes and make overall
Extra revenues are very important improvements to our flight network.
for low cost airlines such as Centra- We are aiming to reach profitability
lwings. Ancillary profits derive from (break even point) in 2008.

UPS AND DOWNS

Vueling: The Third European LCCs IPO of 2006
Vueling Airlines has received the approval of the stock market regulator CNMV for its forth-
coming initial public offering. The Spanish LCC aims to collect around €100m in fresh equity
to support its rapid expansion from current bases in Barcelona and Madrid. Some 42.62 per
cent of the airline should be floated, and this could rise to 46.88 per cent. In its IPO prospec-
tus, Vueling said it expects revenue in 2007 to nearly double to 427.2 mln from the 237.8 mln
expected this year. Vueling is the third European airline to be floated this year following Air
Berlin and Ireland’s Aer Lingus. Both of these carriers had difficulties with the launch of their
IPO. What about Vueling?

3 Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
ANALYST PORTHOLE
No-frills carriers: Revolution or Evolution?
The Civil Aviation Authority (CAA) has released a study entitled No-frills carriers: Revolution
or Evolution? This study points out benefits of LCCs, but also reveals that socio-economic pro-
files of air passengers have not changed. Analysts of CAA agree that Ryanair, easyJet and other
LCCs have revolutionized the European short-haul market. They had a deep impact on busi-
ness travelers, especially on lower income business travelers. However, the study also adds that
passengers taking LCCs have mostly the same profile than before. This point is interesting as it
contradicts most of LCCs communication which insists on the fact that many of their passengers
couldn’t afford airlines tickets before them.
LCCs had two simultaneous effects: a push and a pull effect. The “push effect”: the coming of LCCs has increased routes
and choices of destinations for passengers. The “pull effect”: some cities have experienced a decrease in long-term tou-
rism demand because of the decrease in domestic demand as domestic tourists use LCCs to travel abroad.

No-frills carriers: Revolution or Evolution? is available there: http://www.caa.co.uk/docs/33/CAP770.pdf

European LCCs Network in 2000 European LCCs Network in 2006

LCC EVENT

The 4th French Connect takes place on 25-27th April 2007 in La Baule. This unique event offers you the op-
portunity to network with some of the most influential people in European Low Cost aviation.
French airports, the legislators and Europe’s low cost operators all in one place with first-class conference faci-
lities, superb hotels and dining and a relaxed, entertaining business environment : book your place today!
For further information, please check www.frenchconnect.net

4 Air Scoop - November 2006 www.air-scoop.com

 DOWN TO EARTH
‘‘IDEAWORKS AISLE’’
Allegiant Air Declares its Ancillary Revenue Manifesto

Ryanair is generally given top billing for generating non-

ticket revenue from its passengers. But another star may
steal a portion of the spotlight from Europe’s top low cost by Jay Sorensen
carrier. (President of IdeaWorks)
www.IdeaWorksCompany.com
Allegiant Air generated ancillary revenues of €10.79
(US$13.58) per passenger during the first 6 months of
2006, which bests the €7.84 (US$9.87) posted by Rya-
nair for the same period. This activity translated into
total ancillary revenues in excess of €10 million (US$12.6
million), which admittedly were dwarfed, by revenues
of €147 million (US$185 million) reported by the far lar- In a manner similar to LCCs in Europe, Allegiant Air de-
ger Ryanair for the same period. But Allegiant’s results rives its ancillary revenues from a variety of sources:
are remarkable due to the competitive environment that
exists in the U.S. air travel market. • Commissions and mark-up on vacation packages inclu-
ding hotels, rental cars, show tickets, night club packages
Las Vegas based Allegiant Air has strayed from the mo- and other attractions.
del currently favored in the United States which bundles • Fees charged for advance seat assignments.
amenities in the price of a ticket. Many US-based LCCs • Sales of beverages and snacks onboard its aircraft.
don’t charge extra for advance seat assignments, checked • Onboard retail sales of items such as discount coupon
baggage, onboard beverages, video entertainment, and books and destination souvenirs.
payments made by credit card. The phrase “ancillary re- • Fees charged for reservations made via the call center
venue” has not yet captured widespread use. In contrast, and online booking site (airport ticketing does not incur
Allegiant Air described its ancillary revenue manifesto in fees).
its recent common stock prospectus filed with the U.S. • Charges for excess baggage (checked baggage does not
Securities and Exchange Commission (SEC): incur fees).

“We believe most leisure travelers are concerned prima- The largest percentage of ancillary revenue is generated
rily with purchasing air travel for the least expensive price by the sale of hotel rooms packaged with air travel.
and do not value many of the amenities provided by most
other airlines for free. As such, we have created new sour- All of these distinctions make Allegiant Air a rare bird
ces of revenue by charging fees for services most U.S. airli- in American skies. Its record of consistent profits since
nes currently bundle in their product offering. We believe 2003 suggest the airline has found an attractive niche with
by offering a simple base product at an attractive low fare U.S. consumers. Allegiant’s ability to achieve continued
we can drive demand and generate incremental revenue growth and success may eventually force a redefinition of
as customers pay additional amounts for conveniences the model used by LCCs in the United States.
they value. We aim to continue to create new revenue
sources by further unbundling our product.” As Southwest Airlines once influenced a revolution in
Europe, Ryanair may return the favor by providing the
While this strategy may be little used in the U.S. market, model that is fueling success at Allegiant Air.
it’s difficult to argue with the success enjoyed by Alle-
giant Air. According to the same SEC filing, Allegiant Sources of Information used in this article:
Air achieved revenue growth of 46.6% for fiscal year 2005
• Allegiant Travel Company SEC Form S-1, Preliminary Prospectus da-
over prior year results. Its cost structure may be the envy ted August 23, 2006.
of the U.S. airline industry with an 18.3% advantage over • Financial reports filed by Ryanair for quarters ended June 30, 2006
the average costs of its LCC peers. Allegiant’s profita- and March 31, 2006.
ble record, emphasis on low costs, and drive for ancillary • Exchange rate assumptions: 1US$ = €0.794 Euro, and 1€ =
US$1.259
revenues places it closer to Ryanair and the European
model of offering consumers low fares and an unbundled IdeaWorks cannot guarantee, and assumes no legal liability or respon-
product. sibility for the accuracy, currency or completeness of the information.

5 Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
A Five Forces Analysis of the market demand lags behind the capacity increase of
the carriers, internal rivalry is likely to reach a high level,
the Central European LCC Market resulting in diminishing profit margins.
Michael Porter’s five forces framework is a simple mo-
del which helps identifying the strength of those market
factors that affect the profitability of an industry. When
applied to a well-defined market, the following factors
have to be assessed: internal rivalry, entry/exit barriers,
substitutes and complements, supplier power and buyer
power. The regulatory effects are not included as the fra-
mework is concerned only with forces arising from mar-
ket competition.
The Central European (CE) geographical market is con-
ceptualized here as including the territory of the eight
new EU member states plus Croatia, Bulgaria and Roma-
nia. In the airline industry, each route represents a distinct
product; this definition of the market includes all interna-
tional routes (products) that touch at least one destination
within the territory of these countries. For instance, both
the London-Warsaw and Warsaw-Budapest routes are
part of the market, if served by a low-cost carrier.

Internal rivalry
Entry barriers
Market share can be gained either by opening up a non ser-
The capital intensity of the industry and the limited pos-
ved route or entering into one which is already served by
sibilities of alternative use of the equipments mean that
another carrier. Direct competition therefore occurs if at
sunk costs are generally high constituting a high entry/
least two airlines serve the same route and in this respect
exit barrier to players. However, the new, flexible forms
an entrant can cause the exit of the incumbent player. So
of financing and the tendency to lease aircrafts have signi-
far, the Central European carriers have been able to expand
ficantly lowered those barriers. Furthermore, due to libe-
relatively freely without facing major threats from other
ralisation, administrative obstacles have been eliminated
players. However, as the ‘Islanders’ started their expansion
to a large extent, thus entry to the market became much
to the CE market, intense rivalry arose exactly on those
easier. Expectations about post entry competition, howe-
routes which represent the biggest passenger flows: des-
ver, play a substantial role, especially because the Western
tination pairs from CE capitals to Western and Southern
market is about to reach saturation point and expansion
European metropolises (especially London, Paris, Rome
is primarily taking place in Central Europe. As the num-
and Barcelona) are affected the most, although the high
ber of non served routes decreases, entry will be possible
and relatively less volatile market demand on these routes
only into routes where at least one low-cost player is there
lowers the intensity of rivalry. This is one reason why local
already. Consequently, even if entry/exit barriers current-
carriers keep opening up non served routes and why some
ly are relatively low in Central Europe, they are expected
exits from certain routes have already taken place (for
to rise to a medium level in the future.
example SkyEurope withdrew from Budapest-London
and Warsaw-London, WizzAir from Budapest-Milan and
Substitutes and complements
Budapest-Amsterdam, serving instead Budapest-Eindho-
Traditional air carriers, charter airlines and other means
ven). On the one hand, the total number of those routes,
of transport may appear as substitutes to low-cost flights.
where competition is stiff, is still not significant enough
Even though the fares of traditional air carriers have fallen
compared to the overall size and number of routes served
on routes where they face competition from LCCs, in ge-
in the CE market. On the other hand, the limitations to
neral, their service still cannot be considered competitive if
product diversification (price is the most decisive element
price is taken as the defining element of consumer choice.
of competition) together with the high price transparency
While low-cost carriers mostly target new demand, at the
that makes switching from one carrier to another rather
same time price sensitive passengers tend to switch from
easy for a customer, internal rivalry tends to range from
traditional carriers to LCCs. In the CE market the Euro-
low to medium levels. In the long run, if the growth of

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 BIRD’S EYE VIEW
pean flights of LOT, Czech Airlines, Malév and Tarom a competitive advantage over small ones but this can be
are the most exposed to competition posed by LCCs. In balanced to a certain extent if young and more fuel-effi-
this respect, traditional airlines do not appear as potential cient fleet is used. All in all, supplier power seems to range
substitutes to LCCs, it is rather true the other way around: from low to medium level in Central Europe.
LCCs compete traditionals’ passengers away.
Buyer power
The main substitute of low-cost carriers thus is rail, bus or This is one of the most significant forces that can squeeze
car travel but compared to these vehicles, air transport is away profits from the low-cost carriers. Differentiation
the fastest and most time-efficient of all within distances between customers is very limited: they are price sensitive
that LCCs fly. Transport on the ground in Central Europe and prices are, to a large extent, transparent. Furthermore,
is much more time consuming than in Western Europe LCCs products have very few features that can differenti-
because of the lack of proper infrastructure, thus it is via- ate it from others. Moreover, switching costs of customers
ble for LCCs to strengthen their position in this market by are low. Where a carrier does not face competition, it may
opening up more intra-CE routes. Consequently, although ask for a higher price but only within certain limits. Whe-
price elasticity within a specific route is high because cus- re LCCs directly compete, buyer power tends to be high.
tomers are by definition very price sensitive and can easily This is partly the reason why LCCs are eager to extend
switch from one low-cost provider to another, price elas- their revenue base and rely more on ancillary revenues.
ticity at the industry level is inelastic which shows that Based on the analysis of the Central European market, it
the power of substitutes is low in Central Europe. can be concluded that the low-cost carrier business is ra-
ther unattractive because of the relatively strong presence
Supplier power of forces that squeeze profits away. Only those players
Supplier power consists of airports on the one hand and can have bright prospects in the long run that achieve the
jet fuel suppliers on the other. Generally, the bigger the lowest cost base and critical size in order to have bargai-
LCC is, the more bargaining power it can exercise over ning power over suppliers and take advantage of econo-
suppliers and the more able it is to beat down airport pri- mies of scale. However, being a first-mover seems to be
ces and squeeze profits away from them. In the CE mar- important – if a carrier is the first to serve certain routes,
ket there is not an LCC yet with such a high bargaining it is likely that it can capture the whole of the market
power like Ryanair and easyJet have, but if we take into demand and if it manages to keep fares low, even a small
account that secondary airports tend to establish themsel- player can thrive in the market.
ves as low-cost airports, these efforts can be considered as
relationship-specific investments which manifest a strong
commitment to the low-cost sector. These airports there-
fore will offer very competitive prices to LCCs in order
to attract them.

Concerning airports, the real bottleneck is the availability

of slots – if an airport is about to reach saturation, the
bid for the empty slots becomes more and more inten-
sive which decreases the margins of the bidders. In the
CE market even the major airports are not as contested as
in Western Europe, thus bidding is not likely to become
heated. The exceptions are those “hub” airports for certain
low-cost carriers (Budapest, Bratislava, Warsaw, Katowice
and Prague). In these cases, those players will find it more
difficult to obtain slots that have their hubs elsewhere,
thus “outsiders” will be in a disadvantageous position.

In case of fuel, the larger the purchasing volume is, the

bigger the probability that a lower price per barrel will be
bargained. However, fuel suppliers cannot reduce prices
infinitely and if fuel expenses of LCCs rise, sooner or later
it will impact on ticket prices. This primarily affects small Michael Porter’s Five Forces Framework
players in the CE market as their product portfolio and
revenue base is limited. In this respect, the big LCCs have

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 DOWN TO EARTH
World Travel Market Conference
2006
For the 27th time, the World Travel Market
in London has provided for the whole global
travel and tourism industry the opportunity
to meet, negotiate, network and conduct their
business in one of the best growing sector.
Conferences, seminars, debates and presenta-
tions took places on the latest industry trends
and developments. Many areas of the exciting
sector like airlines, hotels, and health and wel-
lness were focused on the event. More than
5.500 companies from more than 200 coun-
tries exhibited on this event on 41,500 square
metres. Government Ministers, Ambassadors
and High Commissioners participate in the
WTM programme.
“It is very important that the industry remains a major on destinations on a long term scale. The properties are
contributor to today’s global economy. If you continue to left empty, local people cannot afford the increasing pri-
make life difficult for us then you must reap the whir- ces. He also declared to be worried about environmental
lwind. That will happen, if we cannot manage the job as impact on middle and long term. The low-cost airlines
people like us to do“, said Tim Clark, President of Emira- moved now in the same way to Morocco, they receive
tes Airlines at the World Stage in his interview by John enormous help from the local government. He believes
Strickland, airline analyst. “Airlines should stop meekly that we all have benefited from what LCCs have initially
surrendering and accepting their image as the world’s en- done, but warns not to be blind to LCCs impact in middle
vironmental “whipping boys” it was his message. “Airlines and long term.
are responsible for 2 or 3 % global emissions. That compa-
res with 75 % from automotives and I know the UK has On the Tourism Business Frontiers Forum: Looking into
some interesting proposals about that sector”. the Future of Tourism leading academic and professionals
tourism experts agreed on the statement that the LCCs
Dr. Martin Cetron, the world´s leading futurist said: have revolutionized the European travel market and gave
“Airport check-in queues could soon be a thing of the past a new opportunity to people that had not flight before
for travelers because of radio-frequency identification… (Read CAA Study in this issue). One of the panelist said
airport misery for millions of holidaymakers is set to end that passengers probably do not care about the food on
by 2010“. the plane, do not care about seats allocation and some
other frills because they get what they pay for, and they
Recent developments of the new low cost airport at Co- are happy with it. But on the other hand, what he does
miso by the Province of Racusa in Sicily in Italy were pre- believe is, that consumers will start to care in the future
sented at the Italian Press Conference. A new airport that about the attention service and any help or support in case
is still waiting for some final decision is open to welcome of any inconvenience at the airport.
any European LCCs on its 2,500 meters runway soon.
South part of Italy will offer to their new tourists a beau- WTM Forecast Forum presented Global Trends Report
tiful area and atmosphere to enjoy their holiday or even in partnership with EuroMonitor International. Growth
facilitate the purchase of a second home. and impact of LCCs in Europe have been pointed out
many times. Mr. Clement Wong spoke about the first
In the panel “Does size matter”, Noel Josephides, Mana- long-haul low-cost connection between Hong Kong and
ging Director of Sunvil Holidays believes that there is London in Europe. According to him, it will be now a new
no doubt that liberalization and growth of the market are trend in the travel industry. The rise number of tourists
excellent for consumers. Air travel is very cheap, however traveling from Asia, particularly from China and India, to
he is worried about the fact, that Brits are colonizing Eu- Europe will be an issue that will drive this sector over the
rope by buying properties. This can have negative impacts next five years.

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 DOWN TO EARTH
Exclusive Interview with Mr. Vojin Vlahovic
Director of Montenegro National Tourism Organisation

Mr. Vlahovic, this is the first year at the WTM as an independent nation for Montenegro.
What do you believe will be the development of Low-Cost Airlines in your country?

We already have some conversations with two low cost airlines, Ryanair and easyJet. Howe-
ver, Ryanair did show higher interest than easyJet. Ryanair spoke to our Minister of Tourism
about their launch, which is supposed to be any time during the year 2007. These are the only
talks with LCCs till now. Ryanair will probably fly to our two airports, one in the capital Pod-
gorica and other in Tivat. Both airports are completely reconstructed and renovated. We did Vojin Vlahovic
invest more than 20 million Euros improving the infrastructure to attract investors. The funds
came as a loan from the European Bank of Reconstruction and Development.
Will be given any incentives for Ryanair for operating Some new members of Open Sky Agreement after joining
these two airports? the European Union are afraid of negative consequences
in their countries because of the influence of LCCs, I am
It is too early to speak about incentives given to Ryanair. speaking for example about the “cheap tourism effect”.
Some negotiations are not finished yet, and we are waiting Are you not afraid of it?
for the final decision in this issue.
We are not afraid of Low-Cost cheap tourism. We are
Are you open for negotiations with other LCCs? very committed to high quality of Montenegro tourism.
We know our capacity and we look for sustainable econo-
We are open to welcome any Low-Cost Carrier on our mic, ecological and social development. And the LCCs are
airports after joining the Open Sky Agreement. There are very well informed about our wishes and plans. We do not
already some proposals and negotiations between the Na- want to exaggerate and receive massive of people, and we
tional Montenegro Carrier, Ministry of Transportation will be very careful in this issue
and the Ministry of Tourism regarding the development
of LCCs in our country.

Questions to Mr. Niko Bulic

Director of Croatian National Tourist Board

You did speak about LCCs connections and routes in Niko Bulic
your country, growing numbers of independent trave-
lers and subsidies programs in the tourism sector. What units sides, turning some premises that we are not in tou-
do you believe will be the further development of LCCs rism active like further arms areas into tourism. Croatia
in your country and the consolidation in that sector? needs additional 50.000 hotel rooms for 3 class and 4 and 5
Are there any figures related to the investment in your stars. And then it will be for anyone who wants to feature
airports, any subsidies for this sector? Croatia to see how to better connect Croatia with the rest
At last but not least, what about the “Cheap Tourism of Europe.
Effect” in Croatia, are you not worried about it?
You do not have to be now a British Tour Operator or
British Air Carrier to fly from Britain to Croatia. You can
Sky operations and rules are completely opened in Croatia, do it with British, Irish or other Carrier from Britain from
so it is now to the commercial and risk estimation of the Spain, France or other parts of Europe and fly to Croatia.
Low-Cost Carriers to entry to Croatia. The only problem We do not see any obstruction. It is not threatening our
that we see for ourselves comes from the structure of the National Carrier Croatia Airline but competition adds to
accommodating units. There are two things we should be the market excitement.
going for all together by using already our

9 Air Scoop - November 2006 www.air-scoop.com

 DOWN TO EARTH
AIRWAY MARKERS
Exclusive Interview with Mr. Joe Gomez
Commercial Manager of Fly Gibraltar

http://www.flygib.com
Could you please present Fly Gibraltar to our readers?
What are your specificities compared to other European
LCCs?
We should see shortly the first low-cost long-haul flight
to Europe. Do you think it can be the new trend in the
Fly Gibraltar is totally private and independent airline.
Low Cost Carrier Industry? Do you believe that consoli-
The funding comes from a Property Development Com-
dation of the market will lead just to very small number
pany, the owner is Mr. Robert Noonen from Ireland. Fly
of LCCs in Europe.
Gibraltar is based on LCC model but we start to intro-
duce some differences, an extensive selection of services,
The future of LCC is on short-haul flights. The traditio-
a choice of hot meals, light snacks, newspapers, magazines
nal airlines will operate long-haul flights and will have
and seat allocation. We do not want to compromise us
fewer opportunities on short-haul. People want to travel
just to the LCC No Frills model. Fly Gibraltar will con-
as cheap as possible. There is no danger; there is enough
nect Gibraltar with London Stansted, Birmingham, Bris-
space for all of them. And the final decision about the
tol, Manchester and Dublin from April 2007. We will start
future of LCC will make the passengers.
to operate with 2 aircrafts, then we intent to increase one
aircraft and the fourth in the third year.
What is your opinion on Low-Cost Carriers quality? Do
you believe passengers will see any changes in the fu-
What about your routes strategy for the future?
ture?
We plan to expand our routes to Russia and Spain, with
Low Cost Model means flexibility in Cost Management,
direct flights to Barcelona and Galicia. The connection
but meanwhile a certain minimum level of service must
to Galicia is for example at the moment quite complica-
be maintained. Flying is a commodity and passengers want
ted; indeed for passengers that fly to Málaga, they have to
to travel comfortable, but above all cheap. Many people
change the plane in Madrid to finally arrive in Galicia.
are flying now because it is cheap, many of them could not
have afforded it in the past. Obviously you cannot expect
What kind of passenger are you looking for and which
a special service quality flying for 20 Euros. If we start to
area are you focused on?
offer more than the minimum level of service, it would
not be a low cost model any more.
Our passengers will be 50% holiday makers and 50% bu-
siness travelers and British expatriates. Our area of ope-
ration is focused in Gibraltar as a destination. But we are
also focused on Andalusia (south part of Spain) as a cat-
chments area. We are promoting both areas and making
Marketing Mix for those two regions.

How do you analyze the competition with other LCCs?

Are you not afraid about it?

We are not afraid of competition, competition is good for

us. We are also not worried about the increase of capacities
at the airport in Málaga. Our Gibraltar Airport is smaller
than the Málaga Airport. The passenger can be within 20
minutes outside of our airport.
Joe Gomez, Commercial Manager of Fly Gibraltar

10 Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
LCCS AND RUSSIA

German LCCs Going (Far) East the Russian capital city, Air Berlin/DBA is landing at Do-
modedovo airport (South of the city), and Germanwings
By buying his challenger DBA in August 2006, Air Berlin at Vnukovo (West).
has not only reinforced its national network and its num-
ber of business customers, the leading German LCC also Eastern Europe is still one big battlefield for European
won new international routes. LCCs. Poland and Hungary represent already quite busy
markets, and in Romania and Bulgaria, new routes open
Indeed, since 2005, DBA was flying from Munich, Berlin every season. SkyEurope even called its global develop-
and Düsseldorf to Moscow, and since June 2006, it was ment strategy « Go East ». But until now, neither the two
also connecting Stuttgart to the capital of Russia. In addi- big « Islanders » (Ryanair and easyJet), nor the « Cen-
tion, on December 21st, Air Berlin will open for the first tralers » (SkyEurope, Wizz Air, Centralwings...) operate
time its own route to Russia (Nurnberg-Moscow), three flights to Russia. Apart from German ones, only WindJet,
times a week, with connections to several national and Air Baltic or eVolaVia are landing in Moscow. By ope-
international Air Berlin destinations, such as Milan, Pa- ning its Nurnberg-Moscow route, Air Berlin becomes the
ris, Rome... The airline will also inaugurate on December first huge LCC connecting Western Europe to the Russian
18th a route between Berlin-Tegel and Saint Petersburg, city. For the German carrier, it may be an important com-
on Mondays and Fridays. petitive advantage for the future, as the edges of Europe
Now the battle for Russia really begins in the German sky. - Russia, Scandinavia, Northern Africa... - are becoming
Germanwings, Air Berlin’s challenger, opened its first rou- new stakes of the competition on the low-cost market.
tes to Russia, Köln-Moscow and Berlin-Moscow, during
the 2005 summer season. Since summer 2006, it operates Russia may also soon have its own low-cost company as
flights from Köln/Bonn to Saint Petersburg. And since the the first Russian budget airline is expected to be put in
end of October 2006, Germanwings also connects Ham- service at the beginning of 2007. SkyExpress, a common
burg to Moscow and Berlin to Saint Petersburg. The ex- investment of the Russian airline KrasAir and the EBRD
pansion to East is not over: next year, Germanwings will (European bank for reconstruction and development), may
operate one flight per day from Köln/Bonn to Moscow. In serve 20 destinations in the western part of the country.

LCCs’ Subsistence in Russia

December 2006 has been preliminarily declared to be the the high cost of tickets. On the other hand, railway is still
birth month of the first Russian low-cost carrier ever, Sky a competitive and is seen more preferable and secure for a
Express. The project is being co-ordinated by the AirU- certain segment of tourists. Apparently some destinations
nion alliance that consists of such carriers as KrasAir, will be in greater demand than others, with Southern des-
«Domodedovskie Airlines», «Omskavia», «Samara» tinations being the most popular.
and «Sibaviatrans». According to the business plan pre- Undoubtedly, it is still foreign discount airlines which run
sented by parties concerned, Sky Express will operate the show in Russia. Most of them are successful though
flights from Moscow “Vnukovo” Airport to more than there are several exceptions. In 2005, German Aero Flight
20 destinations within Russia. However it is plausible to and Air Arabia based in the United Arab Emirates had
assume that Sky Express being AirUnion’s youngest and to leave the Russian market because of unprofitability.
promising daughter can later on operate flights to such Norwegian Air Shuttle and WindJet were the last carriers
ever trendy destinations as Turkey and Greece. to enter the market. Overall there are 7 LCCs operating
flights from Moscow and Saint Petersburg.
As previous experience of working with foreign low-cost Meanwhile the really interesting aspect of LCCs’ being in
airlines has shown, the perspectives of Sky Express are Russia is their atypical “behaviour.” In the first place, pri-
not something predetermined. On the one hand, such a ces are not the same than those implemented in Europe.
budget transportation is a real steal for those who have In general, they are lower than those of non-low cost car-
to deny themselves travelling through vast territories of riers but this difference is not significant. In some cases
Russia and go for example to Baikal Lake that is basically tariffs offered by national airlines, particularly Aeroflot
cut off from the European part of the country because of and Russia (former Pulkovo), are more economical than

11 Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
LCCS AND RUSSIA
those offered by low-cost carriers. Several reasons can be Fourthly, distance does matter. No doubt that it takes lon-
named that provoke the current situation. ger to get from Moscow to Berlin that from any German
Firstly, there is a lack of “cheap” airports in Russia. Opera- city which is why a flight operating from Moscow is less
ting flights from Moscow and Saint Petersburg, LCCs have apt to pay off.
to sign the same kind of agreement that other airlines do. And at last, aviation authorities in Russia in many cases do
That simply means they get ground handling and mainte- not simply allow LCCs to have low prices. For instance,
nance for normal prices that are high for them. Germanwings could only start operating flights from Rus-
Furthermore, these Russian airports still don’t have all ne- sia providing that an average price would not be less than
cessary equipments and trained personnel for dealing with $100.
LCCs. Especially when it comes to e-ticketing both check-
in agents and passengers got lost. Indeed, there are far less It is clear that LCCs play now a very considerable role in
people with internet access in Russia than in Europe, thus air transportation and it is also clear that Russia needs to
not everybody can purchase a ticket. take its place in the market. In case Russia does not enter
Thirdly, LCCs cannot simply afford budget prices since into it, Russian airlines may soon become non competi-
it is not profitable taking into consideration low flow of tive, especially on international flight routes.
passengers which can be explained by rather slack adver-
tising policy.

Exclusive Interview with Sergey A. Ryzhov

Deputy Sales Director -
Vnukovo International Airport in Moscow

Could you please present the Vnukovo Airport to our

readers. What are your goals for the future related to the Are you giving any incentives for operating your airport?
LCCs development? And how high are the fees?

Vnukovo Airport is the oldest airport in Moscow; we ce- We give to our partners Air Carriers marketing support,
lebrated the 65th anniversary this summer. The Vnukovo especially as advertising programs, because we want to de-
airport is the closest to the Moscow City, only 11 kilome- velop our airport as fast as possible. Unfortunately main
ters to the Moscow Ring Road. Now we are on a big de- fees, in Russia and especially in Moscow, are under Go-
velopment program, we are constructing a new terminal vernment regulation, so these three airports should have
for international and domestic flights. The new interna- the same rates.
tional terminal B is already constructed and was put into
operation two years ago. Our main shareholder the Mos- Do you see any difficulties for European LCCs to join
cow City Government plans this development till 2015, so the Russian Market?
there is so much to do. We have some legal and technical problems. For instance,
not so many people in Russia use internet payments and
Which LCCs are you going to welcome on your airport? credits cards, this is the first problem. Then, we are still
waiting for a new Tax Law that would permit using of
Now we have two terminals, one for domestic flights and electronic tickets, the newest tickets technology. Current-
one for international flights, the third is under construc- ly, the sale of any type of tickets, except paper tickets,
tion now. When the new terminal will be launched, Ter- is simply illegal. However, I think that these problems
minal A, in this Terminal we will serve only regular flights, about this law should be solved in beginning of coming
scheduled flights international and domestic. Other parts, year. Many airlines are looking to increase their frequen-
now existing parts of our terminal complex, will be used cies to Moscow. For example, SkyEurope is looking to
for charter flights and low-cost carriers. So any types of connect Bratislava with Moscow, therefore the Slovakian
LCCs are welcome in our airport. President is now negotiating with Russia about the route.
Many bilateral agreements between Russia and European
Union should be solved, but we do not know when.

12 Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
Future prospects for LCCs on the Polish market LCCS AND POLAND
Because of its projected growth and “Centralers” still have some assets. riers. LOT realized it and wants to
its 40 million inhabitants, the Polish For instance, Centralwings benefits adapt itself to a new proactive posi-
market has become a main target for from its origin as a Polish carrier: the tion. The carrier decided to readjust
European LCCs. Many Polish workers airline speaks the same language than its price offers to the new market
travel in order to get new incomes passengers; it is well informed from conditions and to operate more fli-
abroad in Germany, England, Ireland the local government, it has good re- ghts from the regional Polish airports,
and other Scandinavian countries. lationship with its own cities and citi- which are incredibly booming. The
And on the other hand, more foreign zens, it knows local rules… leader, between these Polish “low-cost
tourists come each year to visit new airports”, is Krakow (1.75 million pas-
Eastern countries of European Union. Ryanair transported 30 million pas- sengers), Katowice (1.1 million) and
According to IATA , the Polish aviati- sengers in 2005 with 2.700 employees Gdansk (930.000).
on market is supposed to grow 11.2% and should transport 42 million pas-
yearly till 2009. sengers this year. To compare with SkyEurope has transported 780.000
“Centralers”, Centralwings transpor- passengers from the Krakow airport
The sappers on the Polish low-cost ted 1.8 million with 335 employees during the last two years; it is approx.
carriers market WizzAir and SkyEu- since its launch in February 2005. 20% of the total airport traffic. SkyEu-
rope become each new day financially Even though these low-cost airlines rope has based there three aircrafts
stronger and hard competitors, but compete on the same market, they and employs 100 peoples. In the next
many other carriers are already on this pay different salaries. Maciej Kwia- summer, the Slovakian LCC wants
market: Air Polonia, Centralwings (a tkowski recently declared that the to open six new connections from
baby of LOT), Germanwings a subsi- lack of good staff is partly caused and Krakow airport. New destinations in
diary of Lufthansa, and also Sterling created by emigration of Polish em- Russia and Ukraine (first attempts in
which started to connect Krakow ployees to England and Ireland. What the past did fail because of some le-
with Copenhagen, Jet 2 with New- a paradox! Indeed, passengers flying gislation problems) come back into
castle and Leed Bradford. Norwegian with Ryanair will find many Polish consideration. New European Union
is the “connections leader” of this year employees working for them as the countries, such as Bulgaria and Roma-
on the Polish market. Last year it star- carrier recruits some of its crew in nia, would be very welcomed on the
ted with two flights from Krakow Poland. The CEO of Centralwings SkyEurope schedule too. SkyEurope
and Warsaw, where this spring ope- has realized this weakness and has tries to connect destinations where
ned its first base outside of Norway. undertaken some measures. In fact, a other LCCs, and especially Ryanair,
Now, Norwegian connects Warsaw scenario with four options as a future are not flying. SkyEurope realized the
with Alicante, Malaga, Stockholm, strategy for Centralwings has been low penetration of Internet and Cre-
Oslo, Rom, Dublin, Athens and fly recently presented to LOT: dit Card payment in these countries,
from Krakow to Stockholm and Oslo. 1. Further development of Centra- and looked after solutions to it in sales
Blue 1 connects Warsaw, Lodz, Wro- lwings within LOT (offering a share through Global Reservation Systems.
claw and Krakow with Helsinki. ea- to a new investors) A new agreement with Hahn Air will
syJet supports Polish laborers with 2. Merger with another European reduce the transaction costs. The loss
its publicity campaign, offers special LCC of SkyEurope has risen from 28.6 mil-
programs and collaborates with re- 3. Integration of Centralwings into lion last year to 57.3 million this year.
cruiting agencies. Many others new LOT The new investor, York Global Fi-
comers will join in a short and me- 4. The sale of the two years old Polish nance II, is still supporting the Cen-
dium term the Polish market. Finally, LCC. tral European LCC.
Ryanair joined the Polish market two The last option is preferred by some
years ago. Its local growth and futu- experts on the aviation market be- WizzAir, the LCC leader on the Po-
re plans to capture the whole Polish cause Centralwings plans to start its lish market, announced it will open in
market worries its rivals. Ryanair has benefits by the year 2008. May 2007 daily connections from Ka-
a very important advantage with its towice and Warsaw to Belfast - ano-
financial situation which goes pretty Focus on Carriers ther job location for Polish citizens.
well compared to some of its compe- The Polish national airline LOT still WizzAir´s shareholder is Indigo, an
titors. With its well-known aggressive has the highest market share, but it American company from the aviation
marketing campaign, “Centralers” has decreased from 47% last year to sector.
(local LCCs) definitely need to adjust 33% this year. The biggest challengers
their development strategy. However, on the market are the low cost car-
13 Air Scoop - November 2006 www.air-scoop.com
 BIRD’S EYE VIEW
LCCS AND POLAND
Ryanair: Etiuda (Warsaw airport, former na- Many Polish airports are offering their
tional airport)? Is there any solution services for the future Ryanair base
Polish Market Ogre! in sight? while waiting for its final decision,
Building a new airport in Warsaw and the owner of Jasionka´s airport,
The Polish aviation market has the hi- may be too long and too expensive. Polish Airports State Enterprise,
ghest growth since joining the Open The low cost airlines need urgently also owner of Warsaw airport, will
Sky Agreement and is predicted to a secondary airport near Warsaw. definitely influence future Modlin
have the highest potential increase Three military airports within a airport. A new airport in Modlin (or
in a near future, according to IATA short distance from Warsaw have near area), used as a base for Ryanair
projections. By the end of this year been competing to be converted into would probably open more access
IATA expects 14.4 million passen- civil airports: Minsk Mazowiecki, doors to future “new” East European
gers (25% more than last year), and Sochaczew and Modlin. For the last countries, that have huge expansion
in the first half of the year, the ove- two years no agreement has been potential not yet exploited.
rall increase was even 33%, expressed reached yet between executives, but
in number of passengers (a total of taking in consideration the pressure Negotiations are also in progress for
6.7 million). An important influence of LCCs lobbies this problem should Ryanair’s technical base. Riga (ca-
on that result has been the low cost be solved any time soon. pital of Latvia) and Jasionka (near
carriers, whose participation share is Rzeszow in Poland) are two potential
higher than 44%, significantly above Ryanair which is currently operating candidates. The European Union will
the European average (according to out of 8 Polish airports did start re- support 8 Polish airports (Gdansk,
the Mercer Consulting, this average cently its first connection from War- Warsaw, Poznan, Rzeszow, Wroclaw,
is around 20% and expected 33% for saw to Dublin. Ryanair’s long term Katowice, Szczecin, Krakow) with
the year 2010). strategy is to reach 10 million passen- approximately 350 million Euros wi-
gers in the Polish market. The Irish thin the next six years. The airports
But from airports’ point of view, the carrier is desperately looking to start will belong to the European Union
aviation industry offers a less specta- the operation to any of the three air- Airport Network which will main-
cular picture. There are 49 internatio- ports within a short time. According tain a high dynamic of development
nal airlines flying within Poland, and to competitions rules, higher num- and meet the conditions of Schengen
they mainly operate out of only 12 ber of airports would produce lower agreement.
airports. The Warsaw airports mar- airports fees, and this would conse-
ket share on the whole number of quently mean lower ticket prices. On The area of voivodship podkarpackie
passengers is approximately 54% for the 26th of October, the Civil Avia- with its airport Jasionka (Rzeszow)
first six months this year, decreasing tion Office did promise to convert that can be operated by all types of
from 61% in the whole year 2005, the military airport of Modlin into aircrafts has a long history of develo-
68% for 2004 and 72% in 2003. A a civil airport, if all conditions were pment of the aviation industry from
second terminal was supposed to be complied. A new agreement is hoped the 1930´s.
delivered by the end of 2005, but af- between three estate shareholders:
ter negotiations and obviously some Military Property Agency (Owner This region delivers 75% of the total
difficulties, the new deadline for the of 99% of the plot), Polish Airports domestic production of the aviation
Arrival Terminal should finally be the State Enterprise (Management ex- sector. The labor cost is 11% lower
30th of November 2006, and for the pert owning 1% of the plot) and voi- than the country´s average and is
Departure Terminal the 30th April vodship administration (with access highly qualified. Some special eco-
2007. The whole investment should to the EU subsidiaries). Because of nomic zones that offer exemptions
be finalized by the 30th of Novem- the impressive growth in the Polish in income tax are present in the
ber, and the airport capacity will be aviation sector, development of a voivodship. Furthermore, in April
then of 12.5 million passengers. new airport in Modlin would find 2003, Aviation Valley Association
many supporters. The region would (a group of aviation industry busi-
This is an excellent solution for le- get new investors, many new compa- nessmen) has been established with
gacy airlines which will operate out nies, hotels and other services would the majority of members located in
of the extended airport Okecie. But be established in that area. A new the area podkarpacie. The goal of this
what about the low cost carriers base for Ryanair and other LCCs association is to transform south-east
which are still on the other side of would support the area even more. Poland into one of Europe´s leading

14 Air Scoop - November 2006 www.air-scoop.com

 BIRD’S EYE VIEW
LCCS AND POLAND
aerospace regions, which would be or more operational bases to connect European market is still smaller than
able to provide a diverse cross section this fast growing Polish market, espe- West European market, and routes
of products and services for the most cially focused on the high demanding are longer and therefore less rentable.
demanding clients. Favorably located, area for air travel near Warsaw. This means that the LCCs market still
this region opens the doors of Eastern needs further investments to obtain
markets and looks forward to develop With its expansions strategy, Ryanair result and start to operate with pro-
further great opportunities. plans to achieve a better result than its fit on Central East European routes.
competitor WizzAir. Ryanair would Some LCCs which concentrate their
Ryanair, which is already the third like to aim 10 million passengers, but business on the CE Europe (WizzAir,
airline after LOT and WizzAir, is rea- without a second airport near War- SkyEurope and CentralWings) may
dy to invest in its new technical base saw, this goal would be difficult to soon encounter problems without any
in Rzeszow, but would also need one reach. Despite a great growth, Central strong capital support.

UPS AND DOWNS

Aer Lingus: A Cold Shower for Ryanair…
The Aer Lingus Employee Share Ownership Trust’s decision to reject the offer ended Rya-
nair’s takeover bid. Some 97 per cent of ESOT which owns 12.6% of the company voted
against the bid. An Impact statement was headlined: «Staff don’t want Michael O’Leary as
boss at any price.» The Irish government which has a 28% stake in Aer Lingus also refused
to sell it.
However, Ryanair (19.2% of the airline) declared its intention to remain a long-term share-
holder in Aer Lingus. It is prevented from bidding for its rival for 12 months. But Ryanair
recently brought its total stake to more than 26% in Aer Lingus when buying €88m worth
of shares.

BLOGS TREND
Blogospehere:
A Close Buzz Coverage

Ryanair is the European LCCs leader in

real life, but also in virtual. Ryanair ex-
perienced a high peak at the beginning
of the month as the hostile takeover bid
for Aer Lingus was still ongoing.

However, closest competitor, easyJet,

has been well covered by blogs media,
especially because of the positions ta-
ken against environmental taxes over
LCCs. Both Islanders are getting closer
in terms of weblog and buzz coverage.

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